Problem:
An investor plans to buy a common stock and hold it for two years. The investor expects to receive $1.5 in dividend a year and $26 from the sales of the stock at the end of year 2.
Required:
Question: If the investor wants a 15% return (compound annually), what is the maximum price the investor should pay for the stock today?
Note: Please provide equation and explain comprehensively and give step by step solution.